1 00:00:22,370 --> 00:00:25,910 Speaker 1: Hello and welcome to the Australian's Money Puzzle podcast. I'm 2 00:00:25,950 --> 00:00:30,110 Speaker 1: James Kirby, wealth editor at The Australian. Now, welcome aboard, everybody. 3 00:00:30,880 --> 00:00:33,540 Speaker 1: My guest today is a special guest, a special guest 4 00:00:33,580 --> 00:00:39,760 Speaker 1: with a capital G. He is quite simply the doyen, really, 5 00:00:40,040 --> 00:00:45,700 Speaker 1: of personal finance investment in Australia, author of Money financial books, 6 00:00:45,960 --> 00:00:51,100 Speaker 1: including Making Money Made Simple, which is, I would reckon, 7 00:00:51,380 --> 00:00:56,670 Speaker 1: on just about every shelf of every home that anyone 8 00:00:56,690 --> 00:00:59,070 Speaker 1: who ever really wanted to get a grab on how 9 00:00:59,150 --> 00:01:04,669 Speaker 1: it all works. I see he's had 25 editions of 10 00:01:04,750 --> 00:01:07,450 Speaker 1: that book, which has got to be a record. It's, 11 00:01:07,470 --> 00:01:10,539 Speaker 1: of course, Noel Whittaker, and I'm delighted to have him 12 00:01:10,620 --> 00:01:13,060 Speaker 1: on the show. He's just produced his latest book, which 13 00:01:13,140 --> 00:01:19,050 Speaker 1: is called Wills, Death and Taxes Made Simple. Hi, Noel. 14 00:01:19,080 --> 00:01:19,550 Speaker 1: How are you? 15 00:01:19,560 --> 00:01:21,730 Speaker 2: Hi, James. Great to be with you. I've been a 16 00:01:21,770 --> 00:01:23,930 Speaker 2: great fan of your podcast for a long time, so 17 00:01:23,950 --> 00:01:25,370 Speaker 2: it's great to talk. 18 00:01:25,750 --> 00:01:27,930 Speaker 1: Oh, thank you very much. Thank you very much. Well, 19 00:01:27,950 --> 00:01:30,870 Speaker 1: there you are. Mutual admiration society of two straight away. 20 00:01:31,370 --> 00:01:34,100 Speaker 1: But tell me about the, yeah, Making Money Made Simple. 21 00:01:34,200 --> 00:01:37,459 Speaker 1: I presume that's your biggest seller of all the books, 22 00:01:37,540 --> 00:01:38,479 Speaker 1: is it? I'm only guessing. 23 00:01:38,720 --> 00:01:41,539 Speaker 2: Yes, I would think so. And so many people call 24 00:01:41,580 --> 00:01:46,770 Speaker 2: it Making Money Made Easy. And there's no connection between 25 00:01:46,870 --> 00:01:52,420 Speaker 2: simple and easy. It's simple, but simple need not be easy. 26 00:01:53,780 --> 00:01:56,800 Speaker 1: We have a joke, basically, inside The Australian. Now that 27 00:01:56,860 --> 00:02:02,020 Speaker 1: we can see so easily how stories perform and all that, 28 00:02:02,040 --> 00:02:05,160 Speaker 1: and you can measure, you know, how many people read it, 29 00:02:05,320 --> 00:02:08,180 Speaker 1: how long did they read it for, etc., We have 30 00:02:08,220 --> 00:02:10,720 Speaker 1: a joke that, like in personal finance, if you want 31 00:02:10,780 --> 00:02:12,940 Speaker 1: a story to go really well, all you have to 32 00:02:12,990 --> 00:02:14,910 Speaker 1: do is put a headline on it which says, like, 33 00:02:15,230 --> 00:02:19,610 Speaker 1: how to make a million easy. And it will always 34 00:02:19,650 --> 00:02:22,030 Speaker 1: be read because there's always this demand, isn't there? There's 35 00:02:22,070 --> 00:02:27,690 Speaker 1: always this misapprehension, I suppose, that you can make money 36 00:02:28,680 --> 00:02:32,140 Speaker 1: easily or without taking a risk or without thinking about it. 37 00:02:32,160 --> 00:02:34,600 Speaker 1: And I think that's something that you've always worked on 38 00:02:34,680 --> 00:02:37,810 Speaker 1: and challenged, really. But at the same time, as you say, 39 00:02:37,830 --> 00:02:38,889 Speaker 1: it can be done. 40 00:02:39,690 --> 00:02:44,049 Speaker 2: Well, look, I've never been one for sensational headlines. If 41 00:02:44,090 --> 00:02:47,250 Speaker 2: I could write a headline, market's about to crash. Yes. 42 00:02:47,510 --> 00:02:49,650 Speaker 1: And it would do well, Noel. It would do well. 43 00:02:49,950 --> 00:02:52,350 Speaker 2: Yes. It would do very well. But the whole thing 44 00:02:52,410 --> 00:02:57,320 Speaker 2: about making money is it happens slowly. And compounding is 45 00:02:57,380 --> 00:03:01,920 Speaker 2: the secret. But compounding is slow to start and gets 46 00:03:02,040 --> 00:03:06,490 Speaker 2: faster and faster as time passes. I tell the story 47 00:03:06,530 --> 00:03:10,030 Speaker 2: of the lily in the pond that doubles every day 48 00:03:10,710 --> 00:03:14,470 Speaker 2: and fills the pond in 10 days. How long to 49 00:03:14,530 --> 00:03:19,370 Speaker 2: go from quarter full to full? The answer is two days, 50 00:03:20,010 --> 00:03:23,830 Speaker 2: quarter to half on the ninth and half full to 51 00:03:23,870 --> 00:03:27,280 Speaker 2: full on the 10th. Now, if that 10 days is 52 00:03:27,310 --> 00:03:32,560 Speaker 2: your investment timeframe and you, because you start late or 53 00:03:32,620 --> 00:03:36,690 Speaker 2: cash early, If you've only got eight days, you miss 54 00:03:36,770 --> 00:03:41,430 Speaker 2: out on three quarters of what you would have had. Basically, 55 00:03:41,450 --> 00:03:43,030 Speaker 2: investment's all about time in. 56 00:03:43,050 --> 00:03:47,710 Speaker 1: And I suppose the corollary of that is to start 57 00:03:47,770 --> 00:03:49,250 Speaker 1: as soon as you possibly can. 58 00:03:49,790 --> 00:03:53,270 Speaker 2: Always. I spoke to a bloke last week. He's now 59 00:03:53,310 --> 00:03:57,030 Speaker 2: worth about $ 400 million. He said, I was in school 60 00:03:57,060 --> 00:03:59,240 Speaker 2: at 15, and you came and gave a talk to 61 00:03:59,260 --> 00:04:02,920 Speaker 2: the kids, and you talked about compound interest, and that 62 00:04:02,960 --> 00:04:06,410 Speaker 2: was life-changing for me. Yes. 63 00:04:07,130 --> 00:04:09,540 Speaker 1: It's something I think that's even more relevant now with 64 00:04:09,980 --> 00:04:15,460 Speaker 1: property prices where perhaps earlier generations, it was a choice. 65 00:04:15,980 --> 00:04:17,950 Speaker 1: Would you like to be wealthy? Would you like to 66 00:04:17,990 --> 00:04:21,590 Speaker 1: make money? This current generation, it's like if you want 67 00:04:21,630 --> 00:04:25,469 Speaker 1: to buy a house, you have to make money. you 68 00:04:25,570 --> 00:04:28,830 Speaker 1: must make that deposit. It's become more compulsory, or at 69 00:04:28,870 --> 00:04:32,190 Speaker 1: least mandatory, I think, for this generation than your generation 70 00:04:32,250 --> 00:04:33,409 Speaker 1: or my generation, I think. 71 00:04:33,570 --> 00:04:36,900 Speaker 2: Well, I think back about 1975, we were building houses. 72 00:04:37,920 --> 00:04:41,440 Speaker 2: And the house was $ 30, 000 in Brisbane, a low-set brick. 73 00:04:42,440 --> 00:04:46,380 Speaker 2: That was two years' income. And people borrowed money at 14%. 74 00:04:46,380 --> 00:04:49,370 Speaker 2: The same house is 10 times dearer at $ 800, 000. So, 75 00:04:54,490 --> 00:04:57,270 Speaker 2: They've just got so much more expensive in real terms. 76 00:04:57,510 --> 00:04:58,250 Speaker 2: That's the problem. 77 00:04:58,750 --> 00:05:02,030 Speaker 1: That is the problem. I want to talk about your 78 00:05:02,089 --> 00:05:04,349 Speaker 1: book in a second and the issues. I just want 79 00:05:04,410 --> 00:05:06,110 Speaker 1: to ask you one quick thing, if I could. I 80 00:05:06,510 --> 00:05:10,470 Speaker 1: had a guest on Tuesday, Duncan Perkins, an accountant who 81 00:05:10,490 --> 00:05:13,150 Speaker 1: was very good. And we mentioned on the show that 82 00:05:13,170 --> 00:05:16,610 Speaker 1: you were coming on today. And he said, Noel is 83 00:05:16,810 --> 00:05:22,770 Speaker 1: very skeptical about investment property. and that he certainly was 84 00:05:22,810 --> 00:05:25,469 Speaker 1: of the impression that you believe that in terms of 85 00:05:25,510 --> 00:05:28,090 Speaker 1: making money, there's a lot of easier ways and more 86 00:05:28,130 --> 00:05:32,760 Speaker 1: reliable ways than investment property. Our shows on Tuesday tend 87 00:05:32,779 --> 00:05:36,260 Speaker 1: to concentrate on investment property. Is that your sort of disposition? 88 00:05:36,820 --> 00:05:40,880 Speaker 2: It's been my experience, James. I've just sold a property 89 00:05:40,900 --> 00:05:42,239 Speaker 2: for $ 700, 000, which cost me $ 220, 000 in 2000. That's 24 years. 90 00:05:48,680 --> 00:05:51,339 Speaker 2: The same money in shares would be worth, in the index, 91 00:05:52,040 --> 00:05:57,520 Speaker 2: which would be worth $ 1. 5 million. Now, I sold this 92 00:05:57,580 --> 00:06:00,880 Speaker 2: because I got sick of it. I had to sell it. 93 00:06:00,920 --> 00:06:03,940 Speaker 2: Now I'm going to pay $ 100, 000 in capital gains tax. 94 00:06:04,660 --> 00:06:08,020 Speaker 2: If that would have been in shares, there's never a 95 00:06:08,060 --> 00:06:11,120 Speaker 2: need to sell. So if you've got property, you need 96 00:06:11,140 --> 00:06:13,839 Speaker 2: to turn it over and make it better and improve it, 97 00:06:14,120 --> 00:06:18,140 Speaker 2: and that's got massive costs. plus the land tax and 98 00:06:18,160 --> 00:06:21,940 Speaker 2: the rates and the insurance, you could buy an index 99 00:06:22,020 --> 00:06:26,230 Speaker 2: fund which requires no decisions and you set and forget. 100 00:06:27,080 --> 00:06:32,490 Speaker 2: It's done 9% total for 120 years. It's hands down 101 00:06:32,529 --> 00:06:32,870 Speaker 2: the best. 102 00:06:33,990 --> 00:06:34,410 Speaker 1: Right. 103 00:06:34,710 --> 00:06:35,130 Speaker 2: Okay. 104 00:06:35,290 --> 00:06:38,590 Speaker 1: But I suppose you would allow that every property is 105 00:06:38,650 --> 00:06:43,730 Speaker 1: individual and there will always be individual properties. Always. 106 00:06:43,750 --> 00:06:47,730 Speaker 2: But the whole thing is, There's no such animal as 107 00:06:47,810 --> 00:06:51,589 Speaker 2: the property market. There might be Point Piper and Cairns 108 00:06:51,890 --> 00:06:54,830 Speaker 2: and Mount Isa and Perth, you know, and some are 109 00:06:54,870 --> 00:06:58,130 Speaker 2: going well and some aren't. About shares, you can start 110 00:06:58,150 --> 00:07:00,589 Speaker 2: with bug rule anyway. That's the great thing about shares. 111 00:07:01,150 --> 00:07:04,969 Speaker 1: It is. It is, absolutely. Okay, terrific. Now, let's talk 112 00:07:05,010 --> 00:07:08,830 Speaker 1: about your new book, which I can tell you, like 113 00:07:08,970 --> 00:07:13,420 Speaker 1: everyone else, I'm only human, and many people have asked 114 00:07:13,440 --> 00:07:16,360 Speaker 1: to come on the show and talk about wills. and 115 00:07:16,440 --> 00:07:21,240 Speaker 1: estate planning. And I have resisted it because I think 116 00:07:21,280 --> 00:07:24,320 Speaker 1: someone has to be very good and very articulate to 117 00:07:24,380 --> 00:07:27,040 Speaker 1: actually make it interesting. And you've just done this book 118 00:07:27,800 --> 00:07:31,430 Speaker 1: on this whole area. And there's a couple of points 119 00:07:31,450 --> 00:07:33,390 Speaker 1: I know that you really wanted to make. One was 120 00:07:33,450 --> 00:07:39,410 Speaker 1: about reviewing your will regularly. If you don't review your 121 00:07:39,450 --> 00:07:42,090 Speaker 1: will regularly, does it become null and void? 122 00:07:43,490 --> 00:07:45,910 Speaker 2: No, it doesn't become null and void, but it may 123 00:07:45,950 --> 00:07:49,670 Speaker 2: be out of date. I mean, since you made the, well, 124 00:07:49,710 --> 00:07:53,510 Speaker 2: most people make the will at age 48. Reason is 125 00:07:53,530 --> 00:07:55,720 Speaker 2: that's when their parents are 80 and they're thinking about 126 00:07:55,760 --> 00:08:02,300 Speaker 2: the inheritance. You know, but you may have extra kids. 127 00:08:03,100 --> 00:08:05,760 Speaker 2: There may be relationship breakdowns. One of your kids might 128 00:08:05,790 --> 00:08:09,090 Speaker 2: have got divorced. There's also, you may have changed houses. 129 00:08:10,120 --> 00:08:14,550 Speaker 2: It's important that your estate reflects the circumstances of the time. 130 00:08:15,530 --> 00:08:17,970 Speaker 2: That's why we say at least every three or four years, 131 00:08:18,450 --> 00:08:21,530 Speaker 2: review your will. But don't forget too, it's four specialties. 132 00:08:22,170 --> 00:08:27,850 Speaker 2: Estate planning is law and tax and superannuation and all 133 00:08:27,870 --> 00:08:31,100 Speaker 2: the financial planning stuff such as aged care. So it's 134 00:08:31,160 --> 00:08:34,000 Speaker 2: a multi-disciplinary area. Yes. 135 00:08:36,020 --> 00:08:37,980 Speaker 1: Every four years is your recommendation. 136 00:08:38,559 --> 00:08:41,020 Speaker 2: Well, not so much that so much. Every time there's 137 00:08:41,100 --> 00:08:42,880 Speaker 2: a change of circumstance. Yeah, yeah. 138 00:08:43,260 --> 00:08:44,589 Speaker 1: Or life, major life events. 139 00:08:44,690 --> 00:08:45,510 Speaker 2: Major life events. 140 00:08:45,750 --> 00:08:49,230 Speaker 1: I mean, very obvious ones being a divorce, for instance. Okay. 141 00:08:49,710 --> 00:08:54,890 Speaker 2: Or the parent's death, you know, or parents to aged care. Also, 142 00:08:55,170 --> 00:08:59,580 Speaker 2: these days, people are living longer and older relationships are 143 00:08:59,620 --> 00:09:03,900 Speaker 2: becoming more common. There's two couples and one partner dies 144 00:09:03,940 --> 00:09:08,070 Speaker 2: in each and they repartner. And that's a whole new 145 00:09:08,110 --> 00:09:12,329 Speaker 2: ballgame again. They want to keep their money for each side. 146 00:09:12,350 --> 00:09:15,360 Speaker 2: They don't want it intermingled. 147 00:09:16,480 --> 00:09:20,140 Speaker 1: You're right. Okay, so let's say that happens. Then what 148 00:09:20,179 --> 00:09:23,540 Speaker 1: would be the pathway for that in the case where 149 00:09:23,740 --> 00:09:28,540 Speaker 1: the couple remarried, where the two individuals who were left widowed, 150 00:09:28,600 --> 00:09:32,020 Speaker 1: if you like, remarried, and they came to you or 151 00:09:32,059 --> 00:09:33,740 Speaker 1: someone like you, what would your advice be? 152 00:09:35,790 --> 00:09:38,570 Speaker 2: Well, first of all, people don't understand, but you can 153 00:09:38,610 --> 00:09:41,480 Speaker 2: have a house as joint tenants or as tenants in common. 154 00:09:43,240 --> 00:09:48,460 Speaker 2: On death, joint tenancy automatically goes to the survivor. And 155 00:09:48,480 --> 00:09:51,990 Speaker 2: that's the way most young couples hold the house. But 156 00:09:52,040 --> 00:09:55,670 Speaker 2: if you're a second relationship, it's normally tenants in common. 157 00:09:56,410 --> 00:10:00,730 Speaker 2: So you could individually leave your share to your own side. 158 00:10:00,750 --> 00:10:04,699 Speaker 2: There's also a trick. Let's say that a couple marry 159 00:10:04,750 --> 00:10:08,660 Speaker 2: and their resources are a little bit out of balance 160 00:10:09,679 --> 00:10:11,840 Speaker 2: and say that she gets sick and needs to go 161 00:10:11,860 --> 00:10:15,520 Speaker 2: to a nursing home. He pays the half a million 162 00:10:15,559 --> 00:10:19,559 Speaker 2: dollars for the bond. On her death, that goes to 163 00:10:19,620 --> 00:10:22,630 Speaker 2: her estate automatically. So his estate is missed out on 164 00:10:22,690 --> 00:10:26,710 Speaker 2: half a million dollars. Now, the way around that is 165 00:10:26,750 --> 00:10:29,030 Speaker 2: he makes a loan to her of half a million dollars. 166 00:10:32,570 --> 00:10:35,780 Speaker 2: Problem solved. It's easier to solve a problem in advance. 167 00:10:37,160 --> 00:10:37,959 Speaker 1: It is, of course. 168 00:10:37,980 --> 00:10:39,900 Speaker 2: Absolutely, it is. 169 00:10:40,360 --> 00:10:42,599 Speaker 1: I wondered, just on that whole area, and it's a 170 00:10:42,700 --> 00:10:45,780 Speaker 1: difficult area, of course it is, and aged care and 171 00:10:46,240 --> 00:10:50,660 Speaker 1: aging of Australia, but a huge issue. And finally, some 172 00:10:50,900 --> 00:10:54,770 Speaker 1: breakthrough in recent times about aged care, which cuts to 173 00:10:54,809 --> 00:10:57,890 Speaker 1: the chase. Basically, people who are self-funded retirees may end 174 00:10:57,929 --> 00:11:01,650 Speaker 1: up paying about $ 9, 000 more than they might have been 175 00:11:01,740 --> 00:11:02,790 Speaker 1: under the old regime. 176 00:11:03,440 --> 00:11:07,179 Speaker 2: And it's complex. Aged care is the most complex topic 177 00:11:07,540 --> 00:11:07,920 Speaker 2: I know. 178 00:11:08,960 --> 00:11:15,490 Speaker 1: Yes. And it's difficult. I mean, it's difficult for everybody to... 179 00:11:16,420 --> 00:11:22,070 Speaker 1: including the sons and daughters of the person who are 180 00:11:22,270 --> 00:11:26,990 Speaker 1: only human and in making decisions financially for their parents, 181 00:11:27,850 --> 00:11:31,890 Speaker 1: only someone with no emotions at all could separate the 182 00:11:31,910 --> 00:11:35,420 Speaker 1: fact that their inheritance is shrinking, basically, on the basis 183 00:11:35,480 --> 00:11:37,760 Speaker 1: of some of the decisions they might make in relation 184 00:11:37,780 --> 00:11:41,040 Speaker 1: to aged care. That's something that everybody has to face. 185 00:11:41,059 --> 00:11:44,800 Speaker 1: One of the things you bring up, enduring powers of attorney, 186 00:11:45,390 --> 00:11:49,350 Speaker 1: Which sounds, could you first of all explain what that is? 187 00:11:49,410 --> 00:11:52,459 Speaker 1: And I just want to explain also, I want to 188 00:11:52,480 --> 00:11:55,100 Speaker 1: bring up the point then as to, it sounds great, 189 00:11:55,140 --> 00:12:01,260 Speaker 1: but what if the person says no? If the person says, yeah, 190 00:12:01,360 --> 00:12:04,400 Speaker 1: when it comes to that stage that I have lost 191 00:12:04,480 --> 00:12:08,500 Speaker 1: my capacity, I'll sign it. But of course, it's too 192 00:12:08,540 --> 00:12:10,650 Speaker 1: late then. I bet that happens all the time. But 193 00:12:10,670 --> 00:12:12,870 Speaker 1: could you explain what enduring powers of attorney is and 194 00:12:12,890 --> 00:12:13,890 Speaker 1: the issues around that? 195 00:12:14,570 --> 00:12:17,500 Speaker 2: There were, There will be a time in most people's 196 00:12:17,540 --> 00:12:22,260 Speaker 2: lives when they don't have capacity. And therefore, the enduring 197 00:12:22,320 --> 00:12:27,460 Speaker 2: power of attorney exists long as they are alive. Many 198 00:12:27,559 --> 00:12:31,260 Speaker 2: people think it survives the deceased, and it doesn't. Many 199 00:12:31,350 --> 00:12:33,730 Speaker 2: widows have rushed down to the bank with the document 200 00:12:34,050 --> 00:12:38,110 Speaker 2: to be told it doesn't work anymore. But I stress 201 00:12:38,150 --> 00:12:41,490 Speaker 2: in the book, you need to rehearse it. Now, a 202 00:12:41,530 --> 00:12:44,790 Speaker 2: case recently I heard about, a woman was a widow. 203 00:12:45,710 --> 00:12:48,949 Speaker 2: Two kids had the endearing powers of attorney. They go 204 00:12:48,990 --> 00:12:53,429 Speaker 2: to the bank to withdraw $ 500, 000 for the bond. Bank 205 00:12:53,480 --> 00:12:57,380 Speaker 2: says a power of attorney is not valid because the 206 00:12:57,460 --> 00:13:03,840 Speaker 2: kids signed before the widow and the document is giving power. 207 00:13:04,679 --> 00:13:07,850 Speaker 2: So those who accept the power can't sign before the giver. 208 00:13:09,110 --> 00:13:15,070 Speaker 2: The lawyer said simply sold. We'll get the attorneys to re-sign. 209 00:13:15,740 --> 00:13:19,820 Speaker 2: The bank says, I know, I'd accept that. And they 210 00:13:20,059 --> 00:13:22,720 Speaker 2: have to go to the court. Because banks can be 211 00:13:22,800 --> 00:13:24,870 Speaker 2: very difficult, extremely difficult. 212 00:13:25,150 --> 00:13:27,650 Speaker 1: Just to backtrack for a second. So during powers of attorney, 213 00:13:27,670 --> 00:13:30,990 Speaker 1: this is a situation where, for instance, I have a 214 00:13:31,050 --> 00:13:35,869 Speaker 1: very old parent. And that very old parent, or I 215 00:13:35,910 --> 00:13:38,050 Speaker 1: or anyone like me, has a very old parent. And 216 00:13:38,630 --> 00:13:42,320 Speaker 1: we know that parent is fine, but we also know 217 00:13:42,420 --> 00:13:45,570 Speaker 1: that in whatever situation, In the three or four years' time, 218 00:13:45,590 --> 00:13:50,750 Speaker 1: the statistics would suggest that they're going to find it 219 00:13:50,890 --> 00:13:55,500 Speaker 1: too hard to pay their bills, to manage things, sign documents. 220 00:13:56,020 --> 00:14:00,540 Speaker 1: So as a preemptive measure, as a defense for them, 221 00:14:00,640 --> 00:14:03,660 Speaker 1: to help them and to help the family have all 222 00:14:03,700 --> 00:14:07,430 Speaker 1: this done properly, the person suggests, hey, dad or hey, mom, 223 00:14:07,809 --> 00:14:10,570 Speaker 1: there's a thing called enduring power of attorney. And if 224 00:14:10,610 --> 00:14:12,890 Speaker 1: you sign it, it means that I'll be able to 225 00:14:12,950 --> 00:14:16,130 Speaker 1: manage your affairs for you on your behalf should you 226 00:14:16,170 --> 00:14:21,590 Speaker 1: lose capacity. Now, that's the enduring property. But how often 227 00:14:22,750 --> 00:14:25,350 Speaker 1: do you think they work? And how often do you 228 00:14:25,370 --> 00:14:27,570 Speaker 1: think the older person resists? 229 00:14:29,010 --> 00:14:32,650 Speaker 2: Well, I think the older person is usually amenable to it. 230 00:14:33,800 --> 00:14:37,190 Speaker 2: The trouble is when you try to use it. If 231 00:14:37,250 --> 00:14:39,930 Speaker 2: the bank doesn't accept it, or worse still, if you 232 00:14:39,970 --> 00:14:42,150 Speaker 2: can't find it. I heard about a guy, he did 233 00:14:42,210 --> 00:14:45,140 Speaker 2: the will, the power of attorney, and the advanced health directive, 234 00:14:46,140 --> 00:14:50,620 Speaker 2: and put them all in the safe. And the kids 235 00:14:50,680 --> 00:14:54,250 Speaker 2: needed the court order to get them. So those documents 236 00:14:54,350 --> 00:14:55,350 Speaker 2: need to be available. 237 00:14:56,490 --> 00:14:58,410 Speaker 1: Okay, so what's the perfect way to do it? 238 00:15:00,130 --> 00:15:03,870 Speaker 2: Well, you need the documents, and your family should know 239 00:15:03,930 --> 00:15:05,920 Speaker 2: about them. One of the things we cover in the 240 00:15:05,960 --> 00:15:08,660 Speaker 2: book is a lot of people now prepay their funerals 241 00:15:10,000 --> 00:15:14,180 Speaker 2: because you can pay $ 15, 500 and be exempt from settling. 242 00:15:15,120 --> 00:15:20,400 Speaker 2: It's a good age pension strategy. But it's too late 243 00:15:21,020 --> 00:15:23,990 Speaker 2: when you're all in church to find out that you 244 00:15:24,030 --> 00:15:29,610 Speaker 2: prepaid a different funeral director. But very important that kids 245 00:15:29,690 --> 00:15:34,720 Speaker 2: know if it's a prepaid funeral, who's got it? I 246 00:15:34,740 --> 00:15:37,220 Speaker 2: hear time and time again, oh, we went through mum's 247 00:15:37,240 --> 00:15:40,190 Speaker 2: stuff and all the things we found, you couldn't believe it. 248 00:15:41,850 --> 00:15:46,750 Speaker 2: One person said all the books were full of banknotes. Yes. 249 00:15:48,010 --> 00:15:51,010 Speaker 1: Well, at least with banknotes, you don't have to seek 250 00:15:51,090 --> 00:15:54,350 Speaker 1: anyone's advice about how to access them. Okay, we'll take 251 00:15:54,390 --> 00:15:57,470 Speaker 1: a short break and we'll be back in a moment. 252 00:16:05,440 --> 00:16:08,280 Speaker 1: Hello and welcome back to the Australian's Money Puzzle podcast. 253 00:16:08,300 --> 00:16:12,290 Speaker 1: James Kirby here talking to Noel Whittaker, the author and 254 00:16:12,370 --> 00:16:16,290 Speaker 1: finance commentator, the original of the species, folks. Long before 255 00:16:16,830 --> 00:16:20,770 Speaker 1: many of us, including myself, were on the scene, Noel 256 00:16:20,820 --> 00:16:23,420 Speaker 1: really was a guiding light on how to do this 257 00:16:23,520 --> 00:16:26,560 Speaker 1: and how to talk to the general public about specific 258 00:16:26,820 --> 00:16:30,060 Speaker 1: financial issues. And you must remember, today we've got podcasts 259 00:16:30,160 --> 00:16:33,700 Speaker 1: and A lot of coverage in newspapers, et cetera. But 260 00:16:33,720 --> 00:16:36,420 Speaker 1: there was a time when there was very little. You 261 00:16:36,460 --> 00:16:38,840 Speaker 1: had to be quite wealthy to get advice. You had 262 00:16:38,860 --> 00:16:41,090 Speaker 1: to be quite wealthy to even use a stockbroker. And 263 00:16:41,110 --> 00:16:44,590 Speaker 1: people like Noel really broke the mold in this area. Noel, 264 00:16:44,650 --> 00:16:47,080 Speaker 1: one of the things you mentioned about in terms of, 265 00:16:47,330 --> 00:16:48,970 Speaker 1: and it's hard to, there's only so much we can 266 00:16:48,990 --> 00:16:52,290 Speaker 1: cover today. But in the past, wills were everything, right? 267 00:16:52,370 --> 00:16:55,860 Speaker 1: The will was the big thing. Yes. Now, enormous amounts 268 00:16:55,920 --> 00:16:59,550 Speaker 1: of money are now in super. And with compulsory super, 269 00:16:59,590 --> 00:17:03,670 Speaker 1: there's a whole generation coming through where outside of the 270 00:17:03,710 --> 00:17:06,330 Speaker 1: family home, most of the money might be in super. 271 00:17:06,490 --> 00:17:09,669 Speaker 1: There mightn't be anything really we're talking about outside of super. 272 00:17:09,730 --> 00:17:12,100 Speaker 1: If they put all their money in super and then 273 00:17:12,619 --> 00:17:17,100 Speaker 1: after they pass on, it's all about how the super 274 00:17:18,440 --> 00:17:21,620 Speaker 1: is passed on. Can you give some information about how 275 00:17:21,680 --> 00:17:23,040 Speaker 1: that should be done properly? 276 00:17:23,580 --> 00:17:27,880 Speaker 2: Well, the first big issue, James, is Your will does 277 00:17:27,940 --> 00:17:32,120 Speaker 2: not determine who gets your super. The trustee of your 278 00:17:32,200 --> 00:17:36,540 Speaker 2: fund is the person who decides who gets the super. Now, 279 00:17:36,580 --> 00:17:40,290 Speaker 2: you can do a binding death benefit nomination that tells 280 00:17:40,330 --> 00:17:43,270 Speaker 2: the trustee what they've got to do. But I think 281 00:17:43,310 --> 00:17:45,930 Speaker 2: the big danger is the death tax. Now, most people 282 00:17:45,970 --> 00:17:49,909 Speaker 2: don't understand the death tax. Now, your super has a 283 00:17:49,950 --> 00:17:54,780 Speaker 2: taxable component that's contributions and earnings, and the only tax 284 00:17:55,220 --> 00:17:57,600 Speaker 2: The exempt component is stuff you've made from your own 285 00:17:57,640 --> 00:18:03,149 Speaker 2: after-tax dollars. Now, that's fine if left to a dependent, 286 00:18:03,650 --> 00:18:06,109 Speaker 2: and your partner's always dependent, but if that's left to 287 00:18:06,150 --> 00:18:09,690 Speaker 2: a non-dependent, there's a 17% tax on death. 288 00:18:11,150 --> 00:18:14,060 Speaker 1: So just for the listeners, just to clarify on this one, 289 00:18:15,540 --> 00:18:19,820 Speaker 1: people nowadays, the amount we're paying in compulsory super, for 290 00:18:19,859 --> 00:18:23,300 Speaker 1: most people, it's so much that it's all they put in, right? 291 00:18:23,320 --> 00:18:24,560 Speaker 1: They don't volunteer or anything else. 292 00:18:24,580 --> 00:18:24,740 Speaker 2: Sure. 293 00:18:25,520 --> 00:18:28,340 Speaker 1: So what you're saying is, let's say for the average 294 00:18:28,400 --> 00:18:32,400 Speaker 1: Australian in 20 years' time, their super will be made 295 00:18:32,480 --> 00:18:35,359 Speaker 1: up probably, I don't know, 80% or 90% will be 296 00:18:35,520 --> 00:18:39,790 Speaker 1: compulsory super that was put in by law. And that money, 297 00:18:41,109 --> 00:18:44,590 Speaker 1: should they seek in the future to pass that on 298 00:18:44,630 --> 00:18:48,270 Speaker 1: to what we call an adult dependent, there's a tax 299 00:18:48,350 --> 00:18:50,409 Speaker 1: on that. It's 17%. Is that what it works out 300 00:18:50,470 --> 00:18:51,270 Speaker 1: at now, thereabouts? 301 00:18:52,090 --> 00:18:57,500 Speaker 2: It's non-dependent. Medicare will be at 2% plus 15%. I 302 00:18:57,520 --> 00:19:00,660 Speaker 2: could just say one thing there. Their balance will be 303 00:19:01,700 --> 00:19:07,670 Speaker 2: probably 30% contributions and 70% earnings. Because as the balance grows, 304 00:19:08,810 --> 00:19:12,590 Speaker 2: the contributions form a smaller component. But that's all taxable. 305 00:19:13,730 --> 00:19:18,050 Speaker 1: Yes. Okay. Fair enough. So it's the contributions. It's that pillar, 306 00:19:18,070 --> 00:19:20,450 Speaker 1: if you like, the core of the contributions that we're 307 00:19:20,470 --> 00:19:21,260 Speaker 1: talking about here. 308 00:19:21,580 --> 00:19:22,300 Speaker 2: And the earnings. Yes. 309 00:19:22,800 --> 00:19:24,740 Speaker 1: And the earnings on them, which is the vast bulk 310 00:19:24,810 --> 00:19:25,850 Speaker 1: of the money, I suppose, is it? 311 00:19:26,220 --> 00:19:28,610 Speaker 2: Sure. So if you've got a half million in super, 312 00:19:28,650 --> 00:19:34,570 Speaker 2: there's $ 85, 000 potential death tax on that. Now, there's ways 313 00:19:34,609 --> 00:19:35,129 Speaker 2: around it. 314 00:19:35,570 --> 00:19:39,730 Speaker 1: There is ways around it. And they're completely, they are 315 00:19:39,950 --> 00:19:43,270 Speaker 1: almost daft, I think, in such a sort of a 316 00:19:43,730 --> 00:19:46,110 Speaker 1: circular thing. But basically what you do is you take 317 00:19:46,130 --> 00:19:48,660 Speaker 1: the super out and you re-contribute it. Is that right? 318 00:19:49,300 --> 00:19:53,560 Speaker 2: Yes, but yes, true. So once you reach 60, you 319 00:19:53,580 --> 00:19:56,580 Speaker 2: can take your super out tax-free and you contribute to 320 00:19:56,900 --> 00:20:00,179 Speaker 2: age 75. So you could take, if your balance is 321 00:20:00,220 --> 00:20:02,610 Speaker 2: half a million dollars, you could take out $ 300, 000 now 322 00:20:02,710 --> 00:20:06,270 Speaker 2: and put it back. But don't forget the earnings are 323 00:20:06,290 --> 00:20:10,570 Speaker 2: still taxable on that. And you can't specify which parts 324 00:20:10,609 --> 00:20:18,130 Speaker 2: you withdraw. So if I've got, say, 80% taxable and 20% non-taxable, 325 00:20:18,230 --> 00:20:22,090 Speaker 2: then the withdrawals will be in those proportions. The best 326 00:20:22,170 --> 00:20:27,129 Speaker 2: solution is to have your attorney instructed to withdraw the 327 00:20:27,210 --> 00:20:30,340 Speaker 2: money when your death is near, tax-free, and put that 328 00:20:30,380 --> 00:20:32,659 Speaker 2: in your bank account. Yes. 329 00:20:33,140 --> 00:20:34,600 Speaker 1: Do many people do that, Noel? 330 00:20:34,920 --> 00:20:37,419 Speaker 2: A woman wrote to me this week. Sorry, her daughter 331 00:20:37,440 --> 00:20:43,119 Speaker 2: ran Dad died and the instructions were to go straight 332 00:20:43,160 --> 00:20:49,610 Speaker 2: to mum. Mum died three days later. Now, Australian super 333 00:20:49,640 --> 00:20:52,370 Speaker 2: were not prepared to pay the benefit to a dead person. 334 00:20:54,109 --> 00:20:58,670 Speaker 2: So the whole estate copped the 17% because mum died 335 00:20:58,750 --> 00:21:02,490 Speaker 2: so fast that there was no time. Don't forget, if 336 00:21:02,530 --> 00:21:04,550 Speaker 2: you're dealing with big funds, it could take six months 337 00:21:04,570 --> 00:21:05,410 Speaker 2: to get the money out. 338 00:21:06,250 --> 00:21:10,310 Speaker 1: Is that right? I know they're notorious. for their delays 339 00:21:10,810 --> 00:21:15,050 Speaker 1: and how slow, and it's probably one of the selling advantages, 340 00:21:15,530 --> 00:21:20,800 Speaker 1: underestimated advantages of self-managed super funds. Absolutely. You don't have 341 00:21:20,820 --> 00:21:23,400 Speaker 1: to deal with all that. But just one last thing 342 00:21:23,460 --> 00:21:28,040 Speaker 1: on that. I know in principle it sounds terrific, but 343 00:21:28,280 --> 00:21:33,730 Speaker 1: how often can a family member in good faith persuade 344 00:21:34,710 --> 00:21:40,210 Speaker 1: someone who's literally close to death To gift all their money. 345 00:21:40,310 --> 00:21:44,369 Speaker 1: I mean, it would be a diplomatic... No, it's going 346 00:21:44,410 --> 00:21:45,570 Speaker 1: to the member's bank account. 347 00:21:47,410 --> 00:21:49,510 Speaker 2: So I've got a million dollars in SIPA, so the 348 00:21:49,550 --> 00:21:52,390 Speaker 2: attorney takes out my million tax-free and puts a million 349 00:21:52,430 --> 00:21:56,330 Speaker 2: dollars in my bank account, and then the will takes over. 350 00:21:57,770 --> 00:22:02,490 Speaker 1: Yes, yes. Okay, I get it. But still, do you 351 00:22:02,530 --> 00:22:04,910 Speaker 1: think it's common that people actually go through that process? 352 00:22:06,070 --> 00:22:09,109 Speaker 2: Well, they don't get around to doing it. That's the 353 00:22:09,130 --> 00:22:13,649 Speaker 2: whole problem. And then, of course, when the guy's close 354 00:22:13,690 --> 00:22:17,070 Speaker 2: to death, they're so traumatized about his uncoming death, they 355 00:22:17,090 --> 00:22:17,840 Speaker 2: still don't do it. 356 00:22:18,590 --> 00:22:20,430 Speaker 1: Of course, that's right. It's very hard to talk about 357 00:22:20,450 --> 00:22:23,840 Speaker 1: things like that at that time. Of course. Okay, one 358 00:22:23,880 --> 00:22:26,260 Speaker 1: last thing. One last thing before we go to questions, 359 00:22:26,440 --> 00:22:27,980 Speaker 1: and we're trying to squeeze in a lot here, but 360 00:22:28,080 --> 00:22:32,119 Speaker 1: about executors. I know there's various points you want to make, 361 00:22:32,160 --> 00:22:35,240 Speaker 1: but I want to say one thing. To our listeners, 362 00:22:35,680 --> 00:22:39,080 Speaker 1: if someone asks them, would they be the executor on 363 00:22:39,119 --> 00:22:46,590 Speaker 1: their will? I have heard absolute horror stories of people 364 00:22:46,650 --> 00:22:50,190 Speaker 1: who very casually said, of course, and ended up being 365 00:22:50,210 --> 00:22:53,290 Speaker 1: the executor on two or three different wills and found 366 00:22:53,350 --> 00:22:58,429 Speaker 1: themselves in the middle of ferociously feuding families. Is there 367 00:22:58,910 --> 00:23:02,770 Speaker 1: any advice you give to people about the whole business 368 00:23:02,850 --> 00:23:04,050 Speaker 1: of being an executor? 369 00:23:04,560 --> 00:23:07,480 Speaker 2: Well, I think the executor stands in the place of 370 00:23:07,540 --> 00:23:10,920 Speaker 2: the deceased. And I think if you're making a will, 371 00:23:10,960 --> 00:23:13,960 Speaker 2: you've got to make sure the executor is a person 372 00:23:14,000 --> 00:23:17,430 Speaker 2: who can do that. Now, that's pretty okay if you've 373 00:23:17,450 --> 00:23:19,830 Speaker 2: only got a house and super, but if you've got, say, 374 00:23:19,850 --> 00:23:23,910 Speaker 2: maybe rental properties and commercial property and stuff, there's big 375 00:23:23,950 --> 00:23:27,030 Speaker 2: decisions to make. In the book, we talk about the 376 00:23:27,070 --> 00:23:30,520 Speaker 2: case for kids and two want to keep the family 377 00:23:30,540 --> 00:23:34,220 Speaker 2: home and two don't. One's saying, mum's promised we could 378 00:23:34,260 --> 00:23:37,119 Speaker 2: mortgage the house for my business. The other says, no. 379 00:23:38,369 --> 00:23:42,930 Speaker 2: And then the executor's got to adjudicate. You know, I'd 380 00:23:42,950 --> 00:23:45,310 Speaker 2: be very loathe to accept anything as an executor. 381 00:23:45,550 --> 00:23:49,689 Speaker 1: You'd be very loathe to accept the task in itself 382 00:23:49,770 --> 00:23:50,750 Speaker 1: of being an executor. 383 00:23:51,430 --> 00:23:51,670 Speaker 2: Either. 384 00:23:52,530 --> 00:23:54,390 Speaker 1: Do you think the person should be a lawyer? 385 00:23:55,430 --> 00:23:57,389 Speaker 2: Well, there's lawyers who will do it for a fee. 386 00:23:57,890 --> 00:24:00,370 Speaker 2: But in my own case... I found that old will 387 00:24:00,410 --> 00:24:03,380 Speaker 2: I'd made 15 years ago was I reviewing the current will. 388 00:24:04,220 --> 00:24:06,760 Speaker 2: And the people I'd chosen as executives, I would never 389 00:24:06,800 --> 00:24:11,580 Speaker 2: pick now. Well, one turned out to be a dreadful 390 00:24:11,619 --> 00:24:17,410 Speaker 2: stock picker. One is now too old and one's deceased. 391 00:24:18,430 --> 00:24:20,890 Speaker 2: That's why in keeping the will up to date is important. 392 00:24:21,810 --> 00:24:24,409 Speaker 2: But I also like to say we stress, don't rush. 393 00:24:25,230 --> 00:24:28,260 Speaker 2: I hear time and time again, dad died, we rushed 394 00:24:28,320 --> 00:24:31,090 Speaker 2: and told the bank. They froze the accounts and we 395 00:24:31,109 --> 00:24:34,239 Speaker 2: couldn't pay for the funeral. Right. You don't need to 396 00:24:34,320 --> 00:24:35,300 Speaker 2: rush and tell the bank. 397 00:24:35,880 --> 00:24:39,879 Speaker 1: Is there a legal requirement about how long you can? 398 00:24:40,780 --> 00:24:43,480 Speaker 2: Not that much, but the other big one is most 399 00:24:43,560 --> 00:24:52,790 Speaker 2: couples exist on the husband's superannuation pension. Now, he dies, 400 00:24:53,090 --> 00:24:56,149 Speaker 2: they rush and tell the fund freezes the pension. It 401 00:24:56,190 --> 00:25:00,220 Speaker 2: can take a year to revive it. And that's a 402 00:25:00,240 --> 00:25:03,889 Speaker 2: major problem. And also a big issue is most people 403 00:25:03,950 --> 00:25:08,470 Speaker 2: on the age pension leave their assets to each other. Now, 404 00:25:08,490 --> 00:25:12,490 Speaker 2: the couple's cutoff point's about a million and the single 405 00:25:12,510 --> 00:25:18,169 Speaker 2: cutoff point's about $ 680, 000. So if you've got $ 800, 000 of 406 00:25:18,290 --> 00:25:21,410 Speaker 2: assets and you're getting a part pension and all the benefits, 407 00:25:22,630 --> 00:25:26,940 Speaker 2: then the husband dies and the widow gets all the money, 408 00:25:27,140 --> 00:25:30,740 Speaker 2: she's over the limit and she loses the pension. All 409 00:25:30,760 --> 00:25:33,300 Speaker 2: these things are so important, and they're all talking about 410 00:25:33,340 --> 00:25:36,680 Speaker 2: big dollars. I mean, these mistakes cost a lot of money. 411 00:25:37,460 --> 00:25:40,070 Speaker 1: Yes. But what could the person, one last thing before 412 00:25:40,109 --> 00:25:41,650 Speaker 1: we go to the big, what could the person do? 413 00:25:41,990 --> 00:25:43,830 Speaker 1: I mean, in a way, there's a justification to that. 414 00:25:43,869 --> 00:25:46,010 Speaker 1: They've just picked up a whole pile of money. You 415 00:25:46,030 --> 00:25:47,629 Speaker 1: don't need a pension as much as they used to. 416 00:25:48,690 --> 00:25:51,970 Speaker 2: Well, yes, but as much simpler, I always believe the same, 417 00:25:52,010 --> 00:25:56,139 Speaker 2: just saying that you give with a warm hand. When 418 00:25:56,280 --> 00:25:58,740 Speaker 2: Bill and Mary are doing their will, they can decide 419 00:25:58,800 --> 00:26:02,540 Speaker 2: which kids to leave the money to. And they could 420 00:26:02,560 --> 00:26:05,250 Speaker 2: leave $ 300, 000 to the kids and mum would still have 421 00:26:05,250 --> 00:26:07,930 Speaker 2: $ 600, 000 and still get the pension. 422 00:26:08,310 --> 00:26:13,760 Speaker 1: Okay. Just a basic, clever, cool, calm assessment of the numbers. 423 00:26:14,150 --> 00:26:16,600 Speaker 1: Very good. Okay. Hey, we'll go to questions. We'll take 424 00:26:16,619 --> 00:26:18,119 Speaker 1: a short break and we'll come back and try and 425 00:26:18,160 --> 00:26:22,120 Speaker 1: get notes to two or three questions from our listeners. 426 00:26:22,380 --> 00:26:29,610 Speaker 1: Back in a moment. Hello, welcome back to the Australian's 427 00:26:29,650 --> 00:26:33,750 Speaker 1: Money Puzzle. I'm James Kirby talking to Noel Fuetiker. Okay, Noel, 428 00:26:33,830 --> 00:26:36,970 Speaker 1: we'll just try two or three of these. David says, 429 00:26:37,260 --> 00:26:40,389 Speaker 1: I'm moving my super from a wrap account to an 430 00:26:40,450 --> 00:26:44,120 Speaker 1: industry fund. I want to ensure that when my accumulation 431 00:26:44,160 --> 00:26:48,220 Speaker 1: phase super changes to account-based pension within the same provider, 432 00:26:48,300 --> 00:26:53,780 Speaker 1: it doesn't trigger a CGT event. However, reading all the documents, 433 00:26:53,980 --> 00:26:56,560 Speaker 1: I can't see a clear answer to the question. People 434 00:26:56,580 --> 00:27:00,419 Speaker 1: are always worried about that, moving money and losing the 435 00:27:00,460 --> 00:27:03,399 Speaker 1: CGT or having to pay tax in some fashion. 436 00:27:03,440 --> 00:27:07,200 Speaker 2: It's the main point, James. Is there insurance with his 437 00:27:07,280 --> 00:27:12,020 Speaker 2: present fund? If there is, will the new fund accept 438 00:27:12,060 --> 00:27:14,520 Speaker 2: the insurance? Because you can't transfer it. 439 00:27:15,480 --> 00:27:18,270 Speaker 1: You can transfer your money, but you can't transfer your insurance. 440 00:27:19,570 --> 00:27:23,050 Speaker 2: One of the lawyers was telling me that they're acting 441 00:27:23,090 --> 00:27:30,480 Speaker 2: for a person. He had five super funds, wife amalgamated 442 00:27:30,520 --> 00:27:35,300 Speaker 2: them to save fees because he had cancer, was dying, 443 00:27:36,280 --> 00:27:39,700 Speaker 2: and she closed the one fund that had. 444 00:27:39,330 --> 00:27:43,030 Speaker 1: A $ 400, 000. 445 00:27:40,330 --> 00:27:45,250 Speaker 2: Insurance in it. So they lost $ 400, 000 death benefits by 446 00:27:45,330 --> 00:27:49,109 Speaker 2: moving funds. So the first thing is, if I'm moving funds, 447 00:27:49,450 --> 00:27:50,859 Speaker 2: is insurance an issue? 448 00:27:51,840 --> 00:27:57,780 Speaker 1: Because if you move the fund... and the CGT is clean, 449 00:27:57,820 --> 00:28:01,010 Speaker 1: I presume. That's not an issue in this case. 450 00:28:01,119 --> 00:28:02,750 Speaker 2: I can't see there's any issue with capital. 451 00:28:02,770 --> 00:28:04,530 Speaker 1: Yeah, I wouldn't have thought so. By the way, David, 452 00:28:04,630 --> 00:28:06,810 Speaker 1: and all the Davids out there, this is never advice. 453 00:28:06,850 --> 00:28:09,190 Speaker 1: This is information only. But here's the point that Noel 454 00:28:09,230 --> 00:28:15,320 Speaker 1: is making. If you're choosing between insurer superfunds, Be very 455 00:28:15,380 --> 00:28:18,940 Speaker 1: careful on the insurance because the insurance doesn't transfer with you. 456 00:28:19,000 --> 00:28:21,080 Speaker 1: And when you go to the new fund, they're going 457 00:28:21,119 --> 00:28:23,350 Speaker 1: to make you take all the medical tests again and 458 00:28:23,460 --> 00:28:25,730 Speaker 1: fill out all the forms again. And the chances are 459 00:28:25,750 --> 00:28:28,449 Speaker 1: you're probably not as healthy as you were when you 460 00:28:28,490 --> 00:28:30,949 Speaker 1: signed it the first time. And so your insurance will 461 00:28:30,990 --> 00:28:32,550 Speaker 1: go up. Would that be the issue? 462 00:28:32,590 --> 00:28:33,710 Speaker 2: No? Spot on. 463 00:28:34,109 --> 00:28:34,409 Speaker 1: Yeah. 464 00:28:34,710 --> 00:28:34,970 Speaker 2: Yeah. 465 00:28:35,070 --> 00:28:38,130 Speaker 1: Okay. All right. So keep that in mind, David. All right, Tina. 466 00:28:38,230 --> 00:28:41,250 Speaker 1: Try and edit Tina a little. Tina, my husband and 467 00:28:41,410 --> 00:28:44,720 Speaker 1: I have a self-managed super fund. Unlike the recommendation of 468 00:28:44,820 --> 00:28:47,040 Speaker 1: one of your recent guests, we certainly didn't have a 469 00:28:47,060 --> 00:28:50,440 Speaker 1: million in super fund. We set it up. Quick question, Noel. 470 00:28:51,130 --> 00:28:52,730 Speaker 1: How much do you think someone should have to set 471 00:28:52,790 --> 00:28:54,110 Speaker 1: up a self-managed super fund? 472 00:28:55,350 --> 00:28:58,729 Speaker 2: Well, they normally say at least $ 300, 000 or $ 400, 000. But 473 00:28:58,770 --> 00:29:02,030 Speaker 2: the main issue is, why do you want a self-managed fund? 474 00:29:03,090 --> 00:29:09,290 Speaker 2: I've got one. They're great for business premises. Perfect. They're 475 00:29:09,350 --> 00:29:13,130 Speaker 2: very good if you've got... I've got money in property syndicates. 476 00:29:14,950 --> 00:29:18,090 Speaker 2: You'd need a self-managed fund for that. That's the main thing, 477 00:29:18,170 --> 00:29:24,100 Speaker 2: I think. What often happens is that the market crashes, 478 00:29:25,900 --> 00:29:29,580 Speaker 2: your superannuation goes down, no matter who it's with. Oh, 479 00:29:29,640 --> 00:29:31,920 Speaker 2: I'll do better myself, and they set up a self-managed 480 00:29:31,940 --> 00:29:37,450 Speaker 2: superannuation fund. Of course, more and more, too, it's normally 481 00:29:37,490 --> 00:29:41,260 Speaker 2: the bloke runs the fund, and then he gets dementia, 482 00:29:41,980 --> 00:29:45,760 Speaker 2: and the wife doesn't want it. I think they're great 483 00:29:45,840 --> 00:29:49,540 Speaker 2: in the right circumstances. As we were saying before, if 484 00:29:49,580 --> 00:29:52,160 Speaker 2: you're taking out money fast, it's going to be much 485 00:29:52,240 --> 00:29:54,160 Speaker 2: quicker in the self-managed fund. 486 00:29:55,180 --> 00:30:00,120 Speaker 1: So, now, what about investment opportunities? I don't mean business property, 487 00:30:00,140 --> 00:30:02,890 Speaker 1: because you mentioned the advantages of business property. Of course, 488 00:30:02,930 --> 00:30:05,130 Speaker 1: if you put your business in an SMSF, it's the 489 00:30:05,170 --> 00:30:09,810 Speaker 1: great thing. But what about residential investment property inside self-managed 490 00:30:09,830 --> 00:30:11,990 Speaker 1: super funds? What do you think of that? 491 00:30:12,270 --> 00:30:15,470 Speaker 2: Well, as you know, I don't like residential real estate. 492 00:30:16,660 --> 00:30:17,440 Speaker 1: In the first place? 493 00:30:17,460 --> 00:30:18,220 Speaker 2: Yes. 494 00:30:18,480 --> 00:30:20,440 Speaker 1: So you're unlikely to like it in a super fund. 495 00:30:20,700 --> 00:30:22,760 Speaker 2: Yes, but the whole thing is this. You make your 496 00:30:22,780 --> 00:30:28,280 Speaker 2: property by gearing. I'd rather buy... borrow 100% of the 497 00:30:28,320 --> 00:30:31,680 Speaker 2: purchase price of the property fully geared in my own name, 498 00:30:33,080 --> 00:30:35,740 Speaker 2: which you don't get that concession in a super fund. 499 00:30:35,800 --> 00:30:38,640 Speaker 2: It's a much lower rate of tax. Then if I've 500 00:30:38,680 --> 00:30:40,600 Speaker 2: got to sell the property, sell it when I'm old 501 00:30:40,620 --> 00:30:42,760 Speaker 2: and I don't earn any money, I'll be in a 502 00:30:42,800 --> 00:30:46,180 Speaker 2: much lower tax bracket. I'd rather keep your real estate 503 00:30:46,200 --> 00:30:48,560 Speaker 2: out of your super. It's much simpler. 504 00:30:48,800 --> 00:30:52,480 Speaker 1: And the point you're making is that you pay high 505 00:30:52,530 --> 00:30:56,360 Speaker 1: tax as an individual and And the negative gearing is 506 00:30:56,700 --> 00:30:59,690 Speaker 1: considerable because the tax is high. In the super fund, 507 00:30:59,710 --> 00:31:02,610 Speaker 1: the tax is low. So the negative gearing isn't as good. 508 00:31:03,050 --> 00:31:04,390 Speaker 1: I suppose that's it. All right. 509 00:31:04,510 --> 00:31:08,190 Speaker 2: Sure. But also, there's some con men out there, the 510 00:31:08,250 --> 00:31:12,720 Speaker 2: property spruikers, who will contact you and say, we will 511 00:31:12,940 --> 00:31:16,780 Speaker 2: start your self-managed super fund, access to super, and we 512 00:31:16,820 --> 00:31:21,800 Speaker 2: will build you a property. And that's a recipe for disaster, 513 00:31:21,840 --> 00:31:22,240 Speaker 2: believe me. 514 00:31:22,970 --> 00:31:24,990 Speaker 1: I don't disagree with you for one moment. 515 00:31:25,710 --> 00:31:25,930 Speaker 2: Sure. 516 00:31:26,310 --> 00:31:28,630 Speaker 1: Folks, you will never hear them on this show. I'll 517 00:31:28,650 --> 00:31:30,390 Speaker 1: tell you that much. We will not have them on. 518 00:31:30,470 --> 00:31:34,490 Speaker 1: And if I sniff anyone trying that, I will protect 519 00:31:34,550 --> 00:31:35,570 Speaker 1: our listeners on that one. 520 00:31:36,130 --> 00:31:36,490 Speaker 2: Okay. 521 00:31:36,630 --> 00:31:38,730 Speaker 1: I think we will leave it at that for today, Noel. 522 00:31:38,830 --> 00:31:41,760 Speaker 1: It was great to talk to you. The name of 523 00:31:42,450 --> 00:31:45,300 Speaker 1: the latest book from Noel is, why don't you tell 524 00:31:45,340 --> 00:31:46,580 Speaker 1: us what it is again once more? 525 00:31:47,120 --> 00:31:50,720 Speaker 2: Will's Death in Texas. Made simple. 526 00:31:50,860 --> 00:31:53,200 Speaker 1: Well, we'll have you on again. It's been great to 527 00:31:53,220 --> 00:31:55,200 Speaker 1: have you on today. So thank you very much. 528 00:31:55,220 --> 00:31:56,740 Speaker 2: It's a pleasure. Thank you. 529 00:31:57,320 --> 00:32:01,090 Speaker 1: And thank you for listening, everybody. Keep those emails coming. 530 00:32:01,190 --> 00:32:03,630 Speaker 1: I have some capacity now to pick up some questions. 531 00:32:03,690 --> 00:32:10,310 Speaker 1: So let's have them. The moneypuzzle at theaustralian.com.au. Producer today 532 00:32:10,630 --> 00:32:15,550 Speaker 1: was Leah Samoglu, who has done a great job both 533 00:32:15,610 --> 00:32:18,110 Speaker 1: today and over the period when I was away. And 534 00:32:18,130 --> 00:32:20,360 Speaker 1: I want to thank her for that on air. OK, 535 00:32:20,410 --> 00:32:25,250 Speaker 1: talk to you soon. Thank you.